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Joined: 14 Jul 2007
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admin
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Location: Greater Boston
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 Posted: Thu Jun 02, 2011 1:02 pm GMT Post subject: |
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I think more accurately, 20% down means lower prices (which will offset tighter lending to some extent) and smaller mortgages, which means less money for Wall Street. That's the real problem, isn't it?
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Renting in Mass
Joined: 26 Jun 2008
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Location: In a house I bought in December 2011
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| Posted: Thu Jun 02, 2011 3:26 pm GMT Post subject: |
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Kerry makes it sound like 20% down is some crazy notion dreamed up by regulators, rather than a prudent lending practice that worked just fine for most of the century.
| Quote: | | Kerry said that in a state where property prices are above the national average — including Massachusetts — it is unreasonable to expect that buyers can afford to put 20 percent toward the purchase price of a home. He said that based on the median sales price for a single-family home in Massachusetts of $274,00, a buyer would need at least $55,000 in cash. |
That doesn't seem unreasonable to me. |
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admin
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| Posted: Thu Jun 02, 2011 3:47 pm GMT Post subject: |
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Yeah, seriously... And it wouldn't even be $55K down, given that the median and what 20% amounts to would become more affordable if the government reduced it's "help". Prices would merely fall to where the same pool of buyers could afford the same houses, in places where the supply is relatively fixed (like here). Subsidizing housing with the ostensible goal of increasing ownership might actually help families where new construction is cheap and plentiful, but elsewhere (like here) the extra money mostly just flows to Wall Street.
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balor123
Joined: 08 Mar 2008
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| Posted: Fri Jun 03, 2011 1:21 pm GMT Post subject: |
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| And sellers. |
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admin
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Location: Greater Boston
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| Posted: Fri Jun 03, 2011 1:32 pm GMT Post subject: |
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| balor123 wrote: | | And sellers. |
Some of them. The money flows to those who sell and then rent or downgrade, but it doesn't really help those who buy something equivalent or move up the property "ladder" (aka, pyramid), since their new place is all the more expensive. Wall Street, on the other hand, makes money regardless.
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balor123
Joined: 08 Mar 2008
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| Posted: Sat Jun 04, 2011 12:11 am GMT Post subject: |
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| Eventually it goes to a seller. The profits from the first home goes to the one whose downgrading then. Eventually, you find someone who's moving to a cheaper area or retiring. A good amount of it was just turned into home equity loans and the bank eventually ended up with the house. |
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admin
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Location: Greater Boston
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| Posted: Sat Jun 04, 2011 12:40 pm GMT Post subject: |
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| balor123 wrote: | | Eventually it goes to a seller. The profits from the first home goes to the one whose downgrading then. Eventually, you find someone who's moving to a cheaper area or retiring. |
Sometimes yes, but not all of the time, and perhaps not the majority of the time. You've left first time buyers out of the equation. They will buy the homes that people on the property ladder/pyramid are upgrading from, and they get no benefit from the subsidies (in expensive markets). In fact, it is detrimental to them because the price is subsequently higher and they also have to take on the risk that the subsidies won't last forever.
So I do agree that the subsidies do help some subset of sellers when they are first introduced, but only from the existing set of owners. The benefit is a one off thing but the increased costs become perpetual for all future buyers.
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balor123
Joined: 08 Mar 2008
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| Posted: Sat Jun 04, 2011 6:12 pm GMT Post subject: |
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| Yes I agree. Housing policy has been getting increasingly lax for 3 decades now, resulting in perpetual transfers of wealth. I, for one, think we should reboot the system. |
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